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    emikif's Avatar
    emikif Posts: 1, Reputation: 1
    New Member

    Sep 4, 2008, 07:26 PM
    Expenses or revenues
    Hello, I am trying to calculate the net income of a company from information that is available from its recent fiscal year. I know how to calculate net income, but I am asking if the following are expenses or revenues.

    - cash sales
    - sales on account
    - interest earned on investment (I think this is an expense, but I am not sure)
    - inventory purchased for resale
    - long term loan received AND
    - common stock issued for cash.

    Thank you in advance!
    AdamUTsel's Avatar
    AdamUTsel Posts: 100, Reputation: 2
    Junior Member

    Sep 5, 2008, 12:51 PM
    The first three are revenues. The 4th is an expense. Long term loan received is neither and expense or revenue. It increases your cash balance and also increases your Note Payable balance. The only income statement effect that could result would be interest charged on the loan, but you did not specify parameters for that. Your last situation is describing a Capital transaction. This would increase your cash balance as well as your common stock balance (I,e. you are selling more ownership of the company to someone to raise funds).

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